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Incentive Program

An incentive program is a formal scheme used to promote or encourage specific actions or behavior by a specific group of people during a defined period of time. Incentive programs are particularly used in business management to motivate employees and in sales to attract and retain customers. Scientific literature also refers to this concept as pay for performance.

Types

Employee

Employee incentive programs are programs used to increase overall employee performance. While employees tend to approve of incentive programs, only 27% of companies have such programs in place.[1][2] Employee programs are often used to reduce turnover, boost morale and loyalty, improve employee wellness, increase retention, and drive daily employee performance.[3]

Consumer

Consumer incentive programs are programs targeting the customers of an organization. Increases in a company's customer retention rate as low as 5% tend to increase profits by 25%-125%.[4][5][6] Consumer programs are becoming more widely used as more companies realize that existing customers cost less to reach, cost less to sell, are less vulnerable to attacks from the competition, and buy more over the long term.

Points programs

Points-based incentive programs are a type of program where participants collect and redeem points for rewards. Points programs may be used to incentivize both employees or consumers. Depending on the program type and the organizational objectives, points can be awarded on a number of criteria including positive employee behavior, the demonstration of organizational values, repeat customer purchases, the sale of new products, increased overall sales, or even the use of proper safety precautions. In addition to point awarding, the levels at which points can be redeemed can be customized by the organization. Points programs are a way for organizations to motivate behavior over time while improving the organizations' overall performance. Loyalty programs are a frequently used points-based incentive program in which customers that exhibit a certain behavior are rewarded with points, reinforcing that behavior.

Sales

These programs are primarily used to drive sales, reduce sales costs, increase profitability, develop new territory, and enhance margins. Sales incentive programs have the most direct relationship to outcomes.[7] A sales incentive plan (SIP) is a business tool used to motivate and compensate a sales professional or sales agent to meet goals or metrics over a specific period of time, usually broken into a plan for a fiscal quarter or fiscal year.[8] An SIP is very similar to a commission plan; however, an SIP can incorporate sales metrics other than goods sold(or value of goods sold), which is traditionally how a commission plan is derived. Sales metrics used in an SIP are typically in the form of sales quotas (sometimes referred to as point of sale or POS shipments), new business opportunities and/or management by objectives (MBOs) independent action of the sales professional and is usually used in conjunction with a base salary.

SIPs are used to incentivize sales professionals where total sales are not a precise measure of sales productivity. This is usually due to the complexity or length of the sales process or where a sale is completed not by an individual but by a team of people, each contributing unique skills to the sales process. SIPs are used to encourage and compensate each member of the sales team as they contribute to the team's ability to sell. It is not uncommon for the members of such teams to be located in different physical locations and for the product introduction to happen in one location and the purchase of such a product to occur in another location.

Dealer

Dealer incentive programs are used to improve performance for dealer, resellers, channel partners and other types of brokers using sales incentive programs. These programs help companies capture market share, launch new products, reduce cost of sales and provide momentum for new launches by incentivizing an external party to drive additional sales.

Online programs

Incentive programs have gained significant traction online; 43% of companies using incentive programs use the Internet as a channel.[9] According to the Online Incentive Council (defunct), since their emergence in 1996, the number of online incentive programs has almost doubled in size every year.[] At present, nearly every traditional incentive company offers an online component in programs including employee motivation and recognition, sales performance, channel programs, and consumer promotions. Companies that run their programs online experience efficient communication, reporting, and awards fulfillment. Online incentive programs pose an attractive alternative to traditional offline programs since online programs save money and time and allow organizations to have greater control.

Incentive websites

A website which pays people in gifts or cash for completing provided offers and referring other people and frequently use an [Affiliate marketing|affiliate] model. These sites are typically sponsored by companies in order to advertise their products. The sites are in turn paid for advertising and attracting new clients. By collecting user data that the user submits, companies can target certain areas of clientele and offer products accordingly.[10]

In most cases, incentive sites grant rewards for completing requirements. This usually requires viewing advertisements, signing up for a site, entering a PIN code (through a mobile device), purchasing trial products or full products or completing surveys. This in turn rewards the specified user in cash, points, check, or its equivalent. Alternately, an offer may entail referring website visitors by inviting them to a target site under a referral link (unique to every user). Referrers in turn are either paid for every person they invited or as percentage of resulting revenue.

Monetary rewards

Selecting the appropriate rewards is vital to any program's success. The goal in choosing rewards is to select items that will spark the participant's interest or feelings, and support the program's objectives. Effective rewards will both motivate short-term behavior and provide motivation over time. There are several types of rewards.

Cash

While incentive program participants often state that they prefer cash to non-cash rewards, research has shown that cash is a poor motivator due to its lack of "trophy value." In a recent study conducted by the Center for Concept Development, three of five respondents agree that a cash payment is perceived to be part of an employee's total compensation package and not as part of an incentive program.[11] Additionally, cash is quickly forgotten as many participants tend to spend it on everyday items or use it to pay bills. Given that most people do not generally talk about cash awards, cash programs do little to generate the interest required to create an effective incentive program.

Research shows that pay for performance often gives only short term gains, frequently gives no gains at all, and may give reduced performance.[12]

Non-cash rewards

Merchandise and other non-cash rewards are more often perceived as separate from compensation. Accordingly, non-cash rewards tend to stand out as rewards for performance, which enhances their long-term effect. Branded merchandise and other non-cash rewards have high trophy value, bringing greater recognition to the recipient at the time of the award and possessing a long-term lasting effect that can result in increased engagement in the organizations goals.

Gift cards/certificates

Gift cards/certificates are prepaid retail cards or certificates which are redeemed at a later time at checkout. In general, they are available in two types: (1) cards which carry a major credit card brand, commonly referred to as universal gift cards (UGC), and are redeemable at all merchants accepting the credit card brand; and (2) retailer-specific cards, issued by well-known merchants, redeemable only through the issuing retailer. In the 2005 Incentive Federation Study of Motivation and Incentive Applications, gift cards were ranked as the most frequently used type of corporate reward.[13]

Merchandise

Merchandise rewards can range anywhere from small branded key chains to high-end electronics. In a 2005 study conducted by the Center for Concept Development, 73% of respondents agreed that more stimulating, memorable incentive programs can be built around merchandise as opposed to cash rewards.[11]

Travel

Travel rewards can best be defined as a face-to-face event designed to motivate, either directly or indirectly. In a 2005 study conducted by the Center for Concept Development, 51% of respondents perceived that travel is remembered longer than other incentive rewards.[11]

Experiential

Experiential rewards provide program participants with an experience. This form of reward gives organizations the ability to offer their employees and customers interesting experiences as incentives. Examples might include a seaplane flight and lunch, a two-hour horse ride on the beach, a day of sailing for two, a chance to meet a star athlete, or the use of a party planner for an occasion of the recipient's choice. Experiential rewards allow participants to share their experiences with others and reinforce the reward and the behavior that led to the giving of the reward.

Non-monetary rewards

Non-monetary incentives are used to reward participants for excellent behavior through opportunities. Non-monetary incentives may include flexible work hours, payroll or premium contributions, training, health savings or reimbursement accounts, or even paid sabbaticals. If it comes to environmental behavior, often labeling and recognition certificates are used. This may include stickers, T-shirts with banner logos, etc. Day care center

When it comes to employee motivation, cash is NOT King! This book is for company leaders who recognize that employees are their most valuable asset. Inside this book you'll learn: -the real reason employees leave -why cash is not the best motivator -8 mistakes companies make in rewarding & recognizing their employees -why companies with structured incentive programs outperform their competitors -10 steps to design your own effective employee recognition program

Janet was a fantastic analyst, but, unfortunately, doing well at your job gets you promoted. Too bad she wasn't nearly as good at managing as she was working with numbers. Worse, she'd bought a house and a new car with her increased salary.

With her job on the line, she had to do something, so when one of her subordinates suggested an incentive program that risked her clothes, she didn't have a choice but to do it.

Build essential skills while having fun with Home Workbooks! Now updated with fun, colorful pages and engaging art, each book measures 7" x 9.25" and is filled with 64 pages of age-appropriate activities, puzzles, and games. These teacher-approved books are perfect for home, school, summer breaks, and road trips! Skills covered include beginning consonant sounds, short vowel sounds, sight word recognition, and more! An incentive chart and 140 full-color stickers are also included to help parents or teachers track student progress. Home Workbooks are available for prekindergarten through grade 3 students, and feature titles in a wide variety of skill areas to suit any need.

Firms have since long given their regular customers special treatment. With the help of IT, many firms have established formal ways to do this. An example is a so-called customer rewards program (CRP), by which the firm rewards the customer for repeated purchase. Firms allocate large resources in these programs with millions of customers enrolled. Hence, it seems important that the CRP works effectively. By effective we mean that it increases sales. Whether it is effective or not is a matter of how it is designed. We study how many membership levels the firm should offer in an effective program. We also study if customers prefer individual or group rewards and whether a CRP can break and create habitual purchasing behavior. In the study, we also analyze under what conditions the customer prefers a CRP over a sales promotion. In general, the study adds to the understanding of Customer Rewards Programs as an incentive structure. There are many different ways to design these incentives and especially the continuing development of IT is expected to influence the future design and role of these types of programs.

Incentive programs arenât new. For years, incentives have been used to motivate employees, dealers and customers. But CFOs and purchasing managers now scrutinize incentive programs because they can adversely affect production, fulfillment, and accounts receivable. An incentive program is like a garden hose. Twist the faucet, the water shoots out. But lots of garden hoses have cracks. You donât want an incentive program that leaks like an old garden hose. Bob Dawson, a nationally recognized expert on incentive return on investment (ROI), brings a unique perspective to incentive program management. His book shows you how to approach incentive programs as an investment rather than just throwing money at ill-chosen merchandise and trips. The book is filled with true stories of programs that succeeded using Dawsonâs method and many that failed without it. A running case study shows how Dawson helped a manufacturer earn substantial returns on their incentive program investment.

A fully revised second edition focused on the best practices of enterprise risk management

Since the first edition of Enterprise Risk Management: From Incentives to Controls was published a decade ago, much has changed in the worlds of business and finance. That's why James Lam has returned with a new edition of this essential guide. Written to reflect today's dynamic market conditions, the Second Edition of Enterprise Risk Management: From Incentives to Controls clearly puts this discipline in perspective.

Engaging and informative, it skillfully examines both the art as well as the science of effective enterprise risk management practices. Along the way, it addresses the key concepts, processes, and tools underlying risk management, and lays out clear strategies to manage what is often a highly complex issue.

Offers in-depth insights, practical advice, and real-world case studies that explore the various aspects of ERM

Based on risk management expert James Lam's thirty years of experience in this field

Discusses how a company should strive for balance between risk and return

Failure to properly manage risk continues to plague corporations around the world. Don't let it hurt your organization. Pick up the Second Edition of Enterprise Risk Management: From Incentives to Controls and learn how to meet the enterprise-wide risk management challenge head on, and succeed.

Your handbook of EVERYTHING you need to know to succeed as a home party sales consultant. This is full of 140 CREATIVE AND FUN party theme ideas & 47 FUN FUN games you can incorporate into your home sales party. Plus hundreds of tips to get you motivated and thinking out of the box to get more leads, recruits & bookings on your calendar. You will find unique bonus & incentive programs, frequently asked questions about filing taxes, ways to spoil your hostess, recruit at shows, and a suggested step by step procedure to follow for following up with clients to increase client loyalty. The number of ideas you'll get are unlimited!! This isn't just an unorganized list of party themes & games. It is all organized by types of parties & themes.

The classic guide to raising your bottom line with the perfect compensation strategyâfully revised and updated!

Sales compensation WORKS!

Nothing motivates a sales force better than a powerful compensation program. And when your salespeople are motivated, revenue soars. But how do you design a program ideally suited for your business strategy and organizational needs? Itâs a delicate balance that makes all the difference between profit and loss.

More and more sales leaders have turned to Compensating the Sales Force to help them discover problems in their present system and create a compensation program that works best for their needs. Now, in the second edition of this authoritative, jargon-free handbook, sales compensation guru David J. Cichelli brings you completely up to date on setting target pay, selecting the right performance measures, and establishing quotas. He supplies clear guidelines for building the right compensation plan for any type of firm, of any size, in any industry, and he offers step-by-step procedures for implementing each approach.

In Compensating the Sales Force, second edition, Cichelli has substantially expanded the bookâs popular formula section, and he provides brandnew examples of:

Income producer plans

Sales rep commission plans

Bonus plans

Incentive plans

Base Salary management plans

The book also includes all-new chapters for global, complex sales organizations and hard-to-compensate sales jobs.

Using the lessons in Compensating the Sales Force, youâll construct and calculate accurate formulas for payout purposes and establish highly efficient support programs, such as sales crediting and account assignment.

Complete with dozens of real-world examples that illustrate important points and demonstrate specific techniques and procedures, Compensating the Sales Force provides all the tools you need to design and implement a sales compensation plan that maximizes profitsâand keeps them climbing.

âIf your company is refocusing its efforts on sales revenue enhancement, you must read this book. If you want motivated salespeople and superior sales results, act on its content.âNoel Capon, R. C. Kopf Professor of International Marketing, Chair of Marketing Division, Graduate School of Business, Columbia University

âThis book provides great guidance for any business leader who wants to capitalize on sales compensation as a tool for driving business results.âRick Justice, Executive Vice President, Worldwide Operations and Business Development, Cisco Systems

Organizations need motivation more than ever. They need customers to buy more and remain loyal. They need prospects to opt-in. They need to inspire employees to produce more and to deliver the customer what the company may promise in sales and marketing literature. In todayâs intensely competitive environment, it is critical for organizations to employ proven strategies that develop intense loyalty from employees and customers alike. A proven tool is the incentive program.

US corporations spend well over $120 billion on customer loyalty and employee incentive programs to accomplish a wide range of goals and objectives. The reason is simple, incentive programs work! As a matter of fact, they are considered to be amongst the most consistently effective and profitable marketing and human resource tools employed by all types of organizations.

Incentives are proven to increase performance, by an average of 22% or more.

Incentives consistently deliver a high ROI

Incentives change long-term behavior

There is an entire industry of resources and experts and resources committed to developing successful incentive and motivation programs.

In this exclusive interview, I talk to incentives expert Paul F, who shares with me his detailed 10-step process to insure incentive success. You will see why successful incentive programs start with a plan, not with a prize.

Paul tells me about an often overlooked and ignored method of tripling the return on an incentive program. He also lets me know proven methods you can use in your business that can double the effectiveness of an incentive program. You will learn how to avoid several major mistakes that could doom your incentive programs before it even starts.

After listening to Paul in this interview, you will see why using the services of an incentive expert is one of the best investments you can make. The mechanism is not dependent on the team performance and the team reward can be something as small as a pizza party to recognize the team. But what happens and where people fail in team incentive programs is where they tie the main bonus award to the performance of the entire team and if there are people who are slacking, the people who are working hard strongly resent the ones who are slacking and it can actually backfire on the program.

Did you know that most radiologists are eligible for the CMS EHR Incentive Programs? Are you prepared for meaningful use? Not sure where to begin?

The Radiologist's Guide to Meaningful Use will help you prepare, develop, execute, and sustain a successful meaningful use strategy--this guide is a road map for diagnostic imaging professionals as they tackle meaningful use and addresses the challenges associated with these incentive programs. It has everything you need to be successful and examines the complex set of one-size-fits-all requirements that make up the program, discusses how these initiatives impact radiology, offers guidance for building your meaningful use strategy, and provides guidance for the diagnostic imaging community.

Praise for the guide

"A practical and effective road map to help imaging professionals navigate the HITECH Act--this book gives you the confidence and know-how to be successful with the CMS EHR Incentive Programs."

"This timely book will serve as a beacon for those searching for answers to meaningful use questions. Administrators, vendors, and front-line radiology practitioners will appreciate this step-by-step model for navigating a confusing topic."